Morgan: ‘Act now or risk leaving millions behind’ as digital payments expand. (Image courtesy: Policy Exchange).

The chair of the UK’s Treasury Select Committee has called for the urgent delivery of measures to ensure that the move towards digital payments leaves nobody behind.

Delivering a keynote speech at the annual conference of lobby group TheCityUK in Westminster last month, Nicky Morgan MP called for government to act on the recommendations of the ‘Access to Cash Review’, published in March. The review was chaired by Natalie Ceeney CBE, the former head of the UK’s Financial Ombudsman Service, and called on the government, regulators and banks to “act now or risk leaving millions behind”.

The review’s recommendations “need to be implemented by industry, government and regulators if access to cash is to be preserved”, said Morgan, emphasising the importance of people having access to a bank branch; the UK has lost two-thirds of branches in the past 30 years. “While our economy may increasingly become cashless in the future, cash will continue to play an important role in the lives of millions for many years,” she added.

Show her the money

Ceeney’s 130-page report concluded that about eight million adults – 17% of the UK population – “would struggle to cope” in a cashless society. It set out five recommendations, namely: take steps to ensure that people have access to cash near where they live or work; take steps to ensure that vendors continue to accept cash; undertake radical change to the wholesale cash infrastructure, to keep cash sustainable for longer; oversee collaboration between government, regulators and the industry to prioritise digital inclusion in payments technologies; and produce a clear government policy on cash, supported by a joined-up regulatory approach that treats cash as a system.

TheCityUK conference came one day after Ceeney herself had spoken at an event in the UK Houses of Parliament, run by the Payment Systems Regulator (PSR) and also attended by Global Government Forum. Here, Ceeney emphasised the urgency of the challenge facing policymakers: “We have seen a large number of councils and an increasing number of shops go cashless in the past year,” she said. “This issue is snowballing.”

In June 2018, consumer group Which? reported that an average of 300 cash machines are disappearing every month.  

Follow the northern lights

Ceeney compared the UK situation with that in Sweden, where her review team had travelled to meet policymakers and market participants. The Scandinavian country – one of the most cashless countries in the world – was highlighted as offering lessons to learn for the UK, where cash use has been described by an expert as being in “rapid” decline.

Ceeney’s report said that Sweden’s government had “put the brakes on” the country’s shift to cashlessness “because they are leaving people behind and need time to plan how to include everyone”. She told the PSR event: “As a Swedish [representative] told me, once the infrastructure is gone, it’s very hard to get it back.”

Her review said that “a near-cashless UK would face significant risks from a system failure or cyber-attack without a non-digital fallback. This risk is real: in Sweden – where cash has reduced to very low levels – it has prompted debates in parliament, leafleting of the public, and contingency planning by the Swedish central bank, the Riksbank.”

The PSR was represented on the panel by its co-managing directors, Louise Buckley and Chris Hemsley. The latter said: “The most immediate thing we can do is stop an ATM shutting.”

Taking notes

During June, HM Treasury announced the terms of reference for a new Joint Authorities Cash Strategy Group, which includes the PSR, the Financial Conduct Authority and the Bank of England. Morgan said at the conference that her committee would be “following the [new] group’s work very closely”.

In May, Morgan’s committee published a report on consumers’ access to financial services, which made a series of recommendations to government and the regulator for how access to financial services can be improved.

A version of this article first appeared on our sister publication Global Government Forum


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